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The FTC begins cracking down on influencers who violate its rules

It has been coming for years. Concerned about advertisements that aren't always distinguishable as advertisements, the US Federal Trade Commission (FTC) has been warning brands and the publishers and influencers they work with that they need to adhere to guidelines designed to ensure that consumers know the score.

Last week, the FTC announced that two influencers active on YouTube, Twitch, Twitter and Facebook had settled charges that they "deceptively endorsed the online gambling service CSGO Lotto...while failing to disclose they jointly owned the company."

In addition, the FTC says that the influencers, Trevor 'TmarTn' Martin and Thomas 'Syndicate' Cassell, paid other influencers to promote CSGO Lotto without requiring them to disclose that they were paid.

A notable first

This is not the first time that the FTC has taken action over influencer marketing rule violations – it previously won a settlement with Lord & Taylor over the retailer's Instagram influencer marketing efforts – but it is the first time that the FTC has gone after influencers themselves for violations.

"Consumers need to know when social media influencers are being paid or have any other material connection to the brands endorsed in their posts," FTC acting-chairman Maureen Ohlhausen stated in a press release. "This action, the FTC's first against individual influencers, should send a message that such connections must be clearly disclosed so consumers can make informed purchasing decisions."

While this settlement is somewhat unique in that the influencers targeted owned the service they were promoting without disclosure, the FTC appears to be making it clear that it is now going to more aggressively pursue influencers for violations of its rule. Indeed, in its press release announcing this settlement, the FTC revealed that it has sent warning letters to 21 of the 90 influencers it contacted in April.

"The warning letters cite specific social media posts of concern to staff and provide details on why they may not be in compliance with the FTC Act as explained in the Commission’s Endorsement Guides," the press release explained. "For example, some of the letters point out that tagging a brand in an Instagram picture is an endorsement of the brand and requires an appropriate disclosure."

One would assume that if any of the 21 influencers the FTC contacted do not respond or don't allay the agency's concerns, new charges could be forthcoming.

A reminder for brands too

On one hand, the FTC's latest enforcement action is good news for brands, as it indicates that the FTC is willing to go after individual influencers and not just brands, who are the bigger financial targets. On the other hand, the FTC's move could signal that the agency is stepping up its enforcement efforts, which means that the entire influencer marketing ecosystem will be under more scrutiny and violations of the FTC's rules will carry with them a greater and greater risk of punishment for both influencers and brands.

The good news is that as the FTC ups its enforcement, it is providing more guidance about what influencers and brands need to do to stay on the right side of the rules. For example, the FTC has also announced updates to its enforcement guides which were last updated in 2015.

The new information in them covers a number of topics, such as the obligations of foreign influencers, disclosure of free travel and whether disclosures must be made at the beginning of paid posts. It also adds platform-specific disclosure guidelines for Instagram and Snapchat.

Among the notable additions:

"Tagging a brand you are wearing [in a photo] is an endorsement of the brand and, just like any other endorsement, could require a disclosure if you have a relationship with that brand."

"There is a good chance that consumers won’t notice and understand the significance of the word 'ad' at the end of a hashtag, especially one made up of several words combined like '#coolstylead.' Disclosures need to be easily noticed and understood."

"The use of '#ambassador' is ambiguous and confusing. Many consumers are unlikely to know what it means. By contrast, '#XYZ-Ambassador' will likely be more understandable (where XYZ is a brand name). However, even if the language is understandable, a disclosure also must be prominent so it will be noticed and read."

"Keep in mind that if your post includes video and you include an audio disclosure, many users of [platforms like Instagram and Snapchat] watch videos without sound. So they won't hear an audio-only disclosure. Obviously, other general disclosure guidance would also apply."

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